Intellectual Capital Measurement and Reporting Models

Intellectual Capital Measurement Models

The existing measurement methods for intellectual capital can be classified into four main categories. These categories are an extension to the classifications suggested by Luthy (1998). Consistent with some of the earlier studies, Sveiby (2007) provided a schematic summary of the existing methods and organized them into four main categories. The first two categories, Return on Assets and Market Capitalization Methods, are intellectual capital measurement methods that measure intellectual capital at the aggregate organizational level; and hereafter are called market models since the data for calculating the value can be obtained from the market and from annual reports. With the exception of VAIC and FiMIAM IC measurement methods that overlap with the management models, the IC is usually measured in an aggregate level and it is not usually broken down into common classifications. The next two categories, Direct IC and Scorecard methods, represent intellectual capital methods at the component level; and are hereafter called management models. The input data for these methods are usually obtained from within organizations. Most methods falling under Direct IC category assign dollar value to IC components, while methods classified under Scorecard do not. Figure 1 graphically summarizes IC measurement models. Methods falling under each of these four categories are discussed in the following sections.

Figure 1.

Methods for measuring intangible assets/ intellectual capital